The Hobart Mercury newspaper has been ordered to pay a former police officer more than $124,000 in damages after it dubbed him "Sergeant Sleaze".

Andrew Scott Gunston was sacked by police after performing a public sex act on a woman in a Queenstown pub in 2002 but was later reinstated.

Last year, Mr Gunston sued the paper for inaccurate coverage of his Tasmanian Industrial Commission hearing, which resulted in the paper using the defamatory label in articles over a 15-month period.

The Supreme Court heard the Mercury inaccurately reported those proceedings, wrongly stating that one of Mr Gunston's colleagues had told the Commission he had become known as "Sergeant Sleaze" in Queenstown.

During the hearing the court was told The Mercury published 34 articles, cartoons and letters which Mr Gunston claimed defamed him.

Chief Justice Ewan Crawford said he had "no hesitation" in concluding the paper, its then editor and four of its former journalists had defamed Mr Gunston and that had affected his ability to find work.

Mr Gunston's lawyer says it is the highest ever damages payout in the state for defamation.

The Mercury's new editor, Andrew Holman, is confident a similar situation will not happen again.

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